The former chancellor Lord Lamont and other Conservatives calling for the scrapping of the 50p top rate of tax are living in "cloud cuckoo land", the Liberal Democrat Treasury minister Danny Alexander has said.

In a fresh sign of tensions between the coalition parties, Alexander and his Lib Dem colleague Vince Cable, the business secretary, said it would be wrong to focus tax cuts on the rich while the British economy is struggling to grow.

"The idea that we're going to somehow shift our focus to the wealthiest in the country at a time when everyone's under pressure is just in cloud cuckoo land," the chief secretary to the Treasury told the Andrew Marr Show on BBC1.

Cable told the Independent on Sunday: "It would be politically inconceivable for government to take some of the tax pressure off high earners at a time when people on low pay are suffering public sector pay restraint and cuts in real incomes because of high commodity prices."

Their remarks came as Lamont, who employed David Cameron as a Treasury special adviser during Black Wednesday in 1992, called for the 50p top tax rate to be scrapped because it makes Britain uncompetitive.

In an echo of Boris Johnson, Lamont wrote in the Sunday Telegraph: "Lower taxes are important. Our taxes are uncompetitive and too high compared with other European countries. The 50% higher rate of income tax is probably one tax which could be abolished without any effect on revenue."

Those views are held widely in the Conservative party. Johnson told the Daily Telegraph last week that abolishing the 50p rate would be "a signal that London is open for business".

George Osborne said in his budget in March that he believes the 50p rate would inflict "lasting damage" on the economy if it became permanent. The chancellor has instructed HM Revenue and Customs to assess how much revenue it generates.

But the chancellor added that it would be wrong to scrap the 50p rate when those on lower incomes are being asked to make sacrifices. This prompted speculation that the 50p rate will be scrapped in April 2013 when a two-year pay freeze for public sector workers is due to come to an end.

Cable warned the government would have to offer a balanced package if it scraps the 50p rate. "We will look at it [the 50p rate], but it will have to be balanced by something that's really strong in terms of tax fairness," he told the IoS.

Alexander was scathing about the Lamont proposal, which was not included in the coalition agreement. He told the BBC: "We set out in the coalition agreement – and it's something that we as Liberal Democrats pushed very hard for – that the government's first priority in tax reductions would be tax cuts for people on low and middle incomes; those very families who are working hard to try and make ends meet.

"Anyone who thinks that we're going to shift our priority to reducing the tax burden for the wealthiest has got another think coming. That cannot be the right priority for a country at this time.

"We're going through very difficult circumstances. We've got real financial pressures on people and we're going to stick to our priority that says tax reductions that we can push through will be aimed at those on low and middle incomes first."

Cable also made clear that he remains attached to his idea of imposing a so-called "mansion tax" on properties worth more than £2m. "Mansions can't run away to Switzerland," he said.